Key Takeaways
- The US dollar remained lower on Wednesday amid market expectations of Federal Reserve minutes and speeches.
- The euro surged by the most in seven weeks due to French bond yields sliding.
- Expectations for a Fed rate hike later this month have retreated, but markets still anticipate more increases in the future.
The US dollar held losses on Wednesday as investors awaited the release of Federal Reserve minutes and speeches from policymakers, according to market analysts.
The dollar index, which measures the greenback against a basket of currencies, rose 0.03% to 101.94, following a 0.27% decline in the previous session.
The euro saw a significant gain, surging by the most in seven weeks, as French bond yields fell after the frontrunner in next spring’s presidential election outlined plans to slash spending.
The Japanese yen weakened 0.19% against the greenback to 158.43 per dollar, while sterling dipped 0.08% to $1.3262.
Bond yields worldwide have increased due to expectations of central bank rate hikes and concerns over government finances.
Oil prices rose as storms and air strikes threatened supply, adding to market volatility.
The calling of a snap election in Spain added to the recent stress on the euro, as French debt faced growing pressure due to budget deficit concerns.
Marine Le Pen, the far-right French presidential candidate, raised her target for spending cuts to €140 billion ($158 billion) from €125 billion in savings originally planned if she wins power in 2027.
The Bank of Japan’s new policymaker Ayano Sato said in an interview that she supports the idea of raising interest rates in several stages.
Three people familiar with the Bank of Japan’s thinking said it may signal this month that underlying inflation has roughly hit its 2% target, indicating readiness for further rate hikes.
Expectations for a Fed rate hike later this month have retreated, but markets are still anticipating more increases later in the year and next year.
Kansas City Fed President Jeff Schmid said on Tuesday that the central bank still needs to raise its policy rate further to lower inflation, even if higher long-term yields are weighing on activity in some parts of the economy.
